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Mineral Royalties

Royalty is payable to the Crown on all minerals recovered from mineral land where the mineral is:

  • sold or intended for sale; or
  • utilised, or to be utilised, for any commercial or industrial purpose.

The following information relating to the preparation of a mining return and calculation of royalty should be read in conjunction with the following:

 

Royalty Rate

In South Australia from 1 July 2011, a royalty rate of 3.5 per cent applies to refined metallic products, including refined copper, gold and silver. It also applies to categories of industrial minerals and construction materials, including limestone and gypsum.

A royalty rate of 5.0 per cent applies to other mineral products, generally concentrates or minimally processed products, including copper concentrate, uranium oxide concentrate and iron ore.

New mines are eligible for a concessional rate of 2.0 per cent for the first five years. Existing mines paying the 1.5 per cent rate are subject to this rate until the end of their five year term.

Extractive minerals (such as sand, gravel and stone) are subject to a royalty rate of 35 cents per tonne of material sold or extracted.

The Government Gazette notice 30 June 2011 (Page 2773) (.pdf 46.5kb) declares certain mineral types as mineral ores and concentrates; refined mineral products; and industrial and construction materials.

Extractive Minerals

The Act states that "extractive minerals means sand, gravel, stone, shell, shale or clay, but does not include -

(a) any such materials that are mined for a prescribed purpose; or
(b) fire clay, bentonite or kaolin."

A portion of the extractive royalty collected is allocated to the Extractive Areas Rehabilitation Fund (EARF) for rehabilitation projects on extractive mineral mine sites. Visit the EARF web page for further information on the Fund and how to apply.

The Regulations 2011 state that the following are prescribed purposes within the definition of extractive minerals under the Act:

(a) chemical, cement, lime and glass manufacture;

(b) metallurgical flux, refractories and industrial fillers;

(c) foundries, fertiliser, agricultural, jewellery and crafted ornamental uses;

(d) any purposes connected with the production of dimension stone. Dimension stone is stone quarried in regular blocks and cut, trimmed and finished to specific dimensions and shapes and includes cut stone, ashlars, monumental stone, roofing slate and flagging stone.

Any mineral used for a prescribed purpose is subject to the applicable mineral royalty rate.

Royalty Assessment Principles

The “ex-mine gate value” is defined as the value that fairly represents the market value of the minerals (excluding GST), less any prescribed costs (see section below), at the time that the minerals leave the area of either:

  • the mining tenement from which the minerals were recovered; or
  • if the minerals have been transported to a miscellaneous purposes license, that license.

For clarification of Royalty Assessment Principles, please refer to Section 17(5) of the Act.

Prescribed Costs (allowable deductions)

Pursuant to Section 17(8) of the Act, certain prescribed costs are not to be included in the market value of a particular mineral at the gate of the relevant tenement. In the Mining Regulations 2011,

For the purposes of section 17(8) of the Act, the costs of the following kinds are prescribed:

(a) costs (including GST) genuinely incurred in transporting the minerals from the relevant tenement to a point of sale (including, for example, packaging, storage, loading, permit, fees and insurance costs);

(b) costs genuinely incurred in shipping the minerals to a genuine purchaser in a sale at arms length;

(c) any other costs determined by the Minister to be a cost of a prescribed kind for the purposes of that section.

‘New Mine Status’ - Reduced Royalty Rate

New mine status allows for a discounted ad valorem royalty rate of 2.0% of the value of the minerals for a period of five years commencing on the date that royalty first becomes due and payable.

In accordance with Section 17A of the Act, a person or company liable to pay royalty for minerals (other than extractive minerals) may apply for ‘New Mine Status’. The Minister may, by notice in the Gazette, then declare that a mine will be taken to be a 'new mine'.

All applications must be in writing outlining all relevant details, which are assessed to ensure the criteria as outlined in Section 17A of the Mining Act has been met.

Mining Returns and Royalty due date

Pursuant to Section 76 of the Act, a tenement holder must provide a mining return each six months by the due date. Failure to lodge a mining return by the due date may result in late lodgment fees and penalties being applied.

Reporting Period Returns posted out to holders Returns and Royalties due to PIRSA
1 January to 30 June Mid-June 31 July of that year
1 July to 31 December Early December 31 January of the next year

A return must contain the information required under Section 76 relating to the conduct of mining operations, the minerals recovered in the course of those operations and the sale or disposal of those minerals during the reporting period.

A mining return form (a “return”) is currently posted out to the registered tenement holder (or authorised party as requested by the holder) towards the end of each reporting period. A return must be completed fully and accurately, signed by the holder/operator and returned to PIRSA by the due date. Any royalty amount due should be included with the return and must be paid by the due date.

It is important to note that a return must be lodged with PIRSA by the due date, even where no production has occurred in that period.

It is the responsibility of the tenement holder to ensure that they have received the necessary return form/s, and they should contact PIRSA if the return forms have not been received by the end of the reporting period (30 June or 31 December).

The Tenement Return Electronic Lodgment System (TreL) has been introduced to enable the on-line lodgment of mining returns and the payment of royalty. Please contact the PIRSA Royalty Officer to request an application form should you require access to TreL.

Please ensure that appropriate records are retained to support reported production and deductions claimed. Records relating to a return must be retained for a period of 7 years and PIRSA may request to inspect the records in order to verify the information supplied.

Penalty for late/non-lodgment of Mining Return

In accordance with the Regulations, an administrative fee for late lodgment of mining return forms will be applied to any returns not received by PIRSA by the due date for the period, even if the tenement has not produced in that period.

Penalty for unpaid royalty

In the case of an extractive mineral lease or mineral lease where royalty remains outstanding, Section17E of the Act provides for penalties to be applied. Penalties are applied for each month (or part of a month) for which the royalty remains unpaid.

For a Private Mine where royalty remains outstanding, Section 73E(5) of the Act provides for penalties to be applied where royalty has not been paid by the due date.

Further Information

For further information on Mineral Royalties in South Australia, please contact:
Senior Royalty and Returns Officer
Royalty Compliance Unit
Mineral Resources Group, PIRSA
PIRSA.Tenements@sa.gov.au
Telephone: +61 8 8463 3095
Facsimile: +61 8 8463 3101